[PHOTO OMITTED]
The
Gabelli
Global
Convertible
Securities
Fund
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
[GRAPHIC OMITTTED]
The Gabelli Global
Convertible Securities Fund
Semi-Annual Report - June 30, 1999
[PHOTO OMITTED]
Hart Woodson
To Our Shareholders,
There were two major economic surprises in the first half of 1999. First,
economic growth in Europe has been weak relative to the United States. Second,
the Asian economies have been surprisingly strong. In late 1998, the fear was
global recession and deflation caused by the Asian crisis and the Russian debt
default. Today, the concern is synchronized economic growth and rising
inflation. The impact on financial markets has been decisive. Bond yields rose
dramatically, while equities have continued to rise, led by Asia and cyclical
stocks. Your portfolio has been positioned to benefit from these developments.
Investment Performance
For the second quarter ended June 30, 1999, The Gabelli Global Convertible
Securities Fund's (the "Fund") total return was 9.4%. The UBS Global Convertible
Index, Merrill Lynch Global Bond Index and Morgan Stanley Capital International
World Free Index of global equity markets had returns of 1.6%, (2.6)% and 5.6%,
respectively, over the same period. Each index is an unmanaged indicator of
investment performance. The Fund was up 15.9% over the trailing twelve-month
period. The UBS Global Convertible Index, Merrill Lynch Global Bond Index and
Morgan Stanley World Free Index rose 14.9%, 3.6% and 16.7%, respectively, over
the same twelve-month period.
For the five-year period ended June 30, 1999, the Fund's total return
averaged 8.7% annually versus average annual total returns of 10.3%, 6.6% and
16.2% for the UBS Global Convertible Index, Merrill Lynch Global Bond Index and
Morgan Stanley World Free Index, respectively. Since inception on February 3,
1994 through June 30, 1999, the Fund had a cumulative total return of 57.5%,
which equates to an average annual return of 8.8%.
<PAGE>
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarter
---------------------------------------------------
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
1999: Net Asset Value ... $10.89 $11.91 -- -- --
Total Return ...... 7.6% 9.4% -- -- --
- ----------------------------------------------------------------------------------------------
1998: Net Asset Value ... $10.43 $10.36 $ 9.09 $10.12 $10.12
Total Return ...... 11.1% (0.7)% (12.3)% 12.2% 8.6%
- ----------------------------------------------------------------------------------------------
1997: Net Asset Value ... $10.27 $10.98 $11.15 $ 9.39 $ 9.39
Total Return ...... 0.9% 6.9% 1.5% (6.1)% 2.8%
- ----------------------------------------------------------------------------------------------
1996: Net Asset Value ... $11.34 $11.55 $11.41 $10.18 $10.18
Total Return ...... 5.1% 1.9% (1.2)% (0.3)% 5.5%
- ----------------------------------------------------------------------------------------------
1995: Net Asset Value ... $10.09 $10.64 $11.05 $10.79 $10.79
Total Return ...... 1.6% 5.5% 3.9% 1.2% 12.6%
- ----------------------------------------------------------------------------------------------
1994: Net Asset Value ... $10.38 $10.37 $10.64 $ 9.93 $ 9.93
Total Return ...... 3.8%(b) (0.1)% 2.6% (5.2)% 0.9%(b)
- ----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Average Annual Returns -- June 30, 1999 (a)
1 Year .......................................................... 15.9%
5 Year .......................................................... 8.7%
Life of Fund (b) ................................................ 8.8%
- --------------------------------------------------------------------------------
Dividend History
- --------------------------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 28, 1998 $0.080 $ 9.96
December 30, 1997 $1.070 $ 9.33
December 31, 1996 $1.200 $10.18
December 29, 1995 $0.393 $10.79
December 30, 1994 $0.160 $ 9.93
(a) Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of the
Fund is reduced on the ex-dividend (payment) date by the amount of the dividend
paid. Of course, returns represent past performance and do not guarantee future
results. Investment returns and the principal value of an investment will
fluctuate. When shares are redeemed they may be worth more or less than their
original cost. (b) From commencement of investment operations on February 3,
1994. Note: Investing in foreign securities involves risks not ordinarily
associated with investments in domestic issues, including currency fluctuation,
economic and political risks.
- --------------------------------------------------------------------------------
Our Investment Objective
The Fund's objective is to obtain a high rate of total return by investing
in global convertible securities. We expect to achieve a competitive rate of
return by investing primarily in coupon paying convertible securities which meet
our selective investment criteria.
2
<PAGE>
Our Approach
We weigh both country-specific and company-specific factors to make our
investment decisions. Country-specific factors include political stability,
economic growth, inflation and trends in interest rates. With regard to
companies, we seek firms which are undervalued in relation to their long term
potential value. We then look for some dynamic in the country or company which
can unlock this value. In the case of global telecommunications, the dynamic is
the privatization of state-owned monopolies. In developing countries, it is the
need to provide the infrastructure for growth. In Japan, it is the change from
an industrial to a consumer-oriented economy. In commodities, it is the increase
in industrial demand.
Global Allocation
The accompanying chart represents the Fund's holdings by geographic region
as of June 30, 1999. The geographic allocation will change based on current
global market conditions. Countries and/or regions represented in the chart and
below may or may not be included in the Fund's future portfolio.
HOLDINGS BY GEOGRAPHIC REGION - 6/30/99
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
United States 38.3%
Europe 29.9%
Janpan 22.7%
Asia/Pacific Rim 5.4%
Canada 3.4%
South Africa 0.3%
What are Global Convertible Securities?
Global convertible securities are bonds, preferred shares and warrants of
domestic or foreign issuers which may be converted into a fixed number of shares
of the underlying company. Convertibles are hybrid securities which combine the
capital appreciation potential of equities with the higher yield of fixed income
instruments. They can be thought of as a straight bond together with an embedded
call option (or warrant) on the underlying equity.
What are the Benefits of Global Convertible Securities?
Reduced volatility is foremost. Investing in foreign equity markets can be
rewarding but volatile. Our goal is to earn a high, risk-adjusted rate of
return. Due to its fixed income characteristics, a convertible security will
provide more stability than its underlying common stock. In the current market
environment, the Gabelli Global Convertible Securities Fund provides an
attractive alternative by combining the capital appreciation potential of global
equity investing with the higher current income usually associated with bonds.
3
<PAGE>
COMMENTARY
Contrary to popular opinion, the U.S. economy continued to show surprising
strength in the first half of 1999. First quarter gross domestic product was
revised upward to a 4.3% annual rate from the previous estimate of 4.1%.
Meanwhile, first quarter after-tax corporate profits rose at a 6.2% annual rate,
the largest gain since the first quarter of 1995. What is driving this growth?
There are a host of reasons including low interest rates, improved productivity,
efficient capital markets and consumption. Personal consumption grew at a 7.6%
rate in the first quarter, the fastest since the comparable period in 1988. The
current economic expansion, which began in 1991, is the longest ever experienced
during peacetime. If the expansion continues until January 2000, it will be the
longest in recorded U.S. history, surpassing the Vietnam War buildup from 1961
to 1969. Can the economic expansion continue or will rising wage rates or higher
oil prices usher in a new era of inflation? Will the perceived "imbalances" in
the economy such as a negative household savings ratio or a growing current
account deficit derail the expansion? We do not know. We do know that the
American consumer is key to economic growth both here and abroad. We will be
watching for any deterioration in consumer confidence. Thus far, consumer
confidence has remained buoyant. In June, the consumer confidence index reached
138.4, the highest reading since October 1968.
Unfortunately, the picture has been less uplifting in Euroland. Although
the "Euro Bubble" economies such as Spain and Ireland remain robust, signs of
acceleration in Italy and Germany are still absent. The German economy,
accounting for nearly one-third of Euroland Gross Domestic Product ("GDP") and
two-fifths of industrial production, barely avoided recession in the first
quarter. We expect that the German economy will benefit from the weak euro,
which has fallen 10% against the U.S. dollar, and the rise in Asian demand. We
will watch the German Information & Forschung Institut ("IFO") Business
Confidence Indicator as a precursor to such recovery. The indicator has been
fluctuating around 90 since late last year. Meanwhile, we remain positive on
financial assets in Euroland as consolidation acts as a catalyst to unlock
shareholder value.
Asian markets performed best in the second quarter. Indonesia gained 119%
in the quarter, followed by Malaysia, Korea, Thailand and Singapore which each
rose by more than 50%. Korean industrial production rose by over 20% year over
year in May. The recovery is being lead by a robust U.S. economy and reviving
import demand from Japan. Fiscal stimulus and a "zero" interest rate policy in
Japan are beginning to take hold. GDP grew by 7.9% in the first quarter and
business confidence is rebounding according to a recent Tankan report. However,
the main driver for stock performance in Japan will be corporate restructuring.
Consequently, the economy may continue to lag as companies cut capital spending
and eliminate jobs in an effort to improve profitability. On a company specific
basis we are bullish on Japan and have increased the weighting in the portfolio
from 8% to over 20% over the last six months.
4
<PAGE>
Let's Talk Converts
The following are specifics on selected holdings of our Fund. Favorable
earnings prospects do not necessarily translate into higher prices, but they do
express a positive trend which we believe will develop over time. The share
prices of foreign holdings are stated in U.S. dollar equivalent terms as of June
30, 1999.
Clear Channel Communications Inc. (2.63%, 04/01/03) is a diversified media
company with businesses involved in broadcasting and outdoor advertising. The
company owns, programs and sells airtime for various U.S. and international
radio and television stations. The company is expanding its outdoor advertising
in France, Italy and Spain through the acquisition of the Dauphin Group, a
leading European outdoor advertising company. Revenue from CCU's radio and
outdoor operations continues to grow, rising an estimated 10% in the first and
second quarters of 1999 on a pro forma basis.
With the stock at $68.9375, Clear Channel's 2.63% convertible bond trades
at 128.25%. The bond due in 2003 has a BBB- rating and yields 2.05% on a 13.70%
premium. The common stock pays no dividend.
Elektrim SA (2.00%, 05/30/04) operates four main businesses: power engineering,
electrical machinery, telecommunications and cable manufacturing. Elektrim has
made strategic investments in Polska Telefonia Cyfrowa, a leading domestic
wireless GSM ("Global System for Mobile Communications") provider, and Bresnan
Communications Poland, the largest cable television operator in Warsaw.
Recently, Vivendi, the French telecommunications and services conglomerate,
agreed to invest US$750 million for a 30% stake in Elektrim. These strategic
moves will provide the investment capital and critical mass for Elektrim to
establish itself as a major player in the Polish telecommunications market.
With the stock at Polish Zloty 55.50, Elektrim's euro denominated 2.00%
convertible bond due in 2004 trades at 139%. The bond offers a current yield of
1.43% as opposed to the common stock that pays no dividend. Because of the
difficulty of conversion in the Polish market, the bonds trade at a 10% discount
to their intrinsic value making them a cheap alternative to the common. We plan
to exercise our conversion right and exploit this arbitrage opportunity.
Global Telesystems Group Inc. (GTSG - $67.00 - Nasdaq) is a European
telecommunications services company. The company provides broadband and Internet
protocol based services, carrier and Internet service provider services,
international and domestic long distance, local exchange carrier services and
mobile services. The recent acquisitions of Esprit Telecom and Omnicom provide
GTSG with broader customer reach at both the retail and wholesale levels.
With the stock at $67.00, Global Telesystems' 7.25% convertible preferred
trades at $81.00 on a 15.79% premium and a current yield of 5.46%.
5
<PAGE>
Ricoh Leasing Co. Ltd. (0.40%, 09/30/02) began as a credit sales and leasing
firm for its parent, Ricoh Co., an office products manufacturer. The new company
focus is on becoming a sales-support leasing specialist for suppliers, cashing
in on the small-lot management of equipment. Currently, the leasing business is
expanding and profit is rising, led by Ricoh office equipment and store
facilities. In the year ending March 1999, net profit totaled Y 2.85 million
compared to Y 2.40 million in 1998. Earnings per share increased from Y 135.3 in
1998 to Y 160.1 in 1999.
With the stock at Y 3440, Ricoh Leasing's 0.40% convertible bond trades at
143%. The bond yields 0.28% on a discount to parity.
Scandinavian Broadcasting System SA (Sub. Deb. Cv. 7.00%, 12/01/04) owns and
operates television stations mainly in Sweden, Norway, Denmark, the Netherlands
and part of Belgium. The company also owns and operates radio stations in
Denmark, Finland and Sweden. United Pan-Europe Communications plans to purchase
a 12.8% interest in SBS for $105.8 million, as the two companies plan to jointly
buy and create television programs. At present, SBS owns 18 television stations
in 13 countries reaching over 150 million customers.
With the stock at $32.25, Scandinavian Broadcasting's 7.00% convertible
bond trades at $124.00 on a 13.77% premium and a current yield of 5.65%.
Seagram Co. (VOY - $49.9375 - NYSE) operates spirits, wine and entertainment
businesses worldwide. The company produces and markets distilled spirits and
wines, as well as coolers, beer and mixers. Through its entertainment company,
Universal, Seagram produces and distributes motion pictures, television
programming and home video products. The company also operates theme parks and
retail stores. In May, Universal Music, a subsidiary of Seagram, joined AT&T and
Matsushita Electric Industrial to develop a system for buying and selling music
on the Internet.
With the stock at $50.375, Seagram Company's 7.50% mandatory convertible
preferred trades at $49.9375. The preferred has a BB rating and yields 7.30% on
a 19.14% premium.
Village Roadshow Ltd. (VRLPA - $37.00 - Australian Stock Exchange) produces,
distributes and exhibits motion pictures. The company operates tourist theme
parks in a joint venture with Warner Brothers. The company also operates radio
stations and over-the-air and pay television broadcasting channels.
Village Roadshow's convertible preferred has an unusual structure. If the
6.50% preferred is not converted into common stock by 2008, it will convert into
a straight perpetual preferred with the same dividend yield. In the meantime,
the conversion ratio will fluctuate like that of a mandatory convertible
security. If the stock is below A$3.00, the investor will receive a maximum of
25.49 shares of common stock. If the stock rises above A$3.60, the conversion
ration will decline to 21.249 shares. Currently, with the stock at A$2.30, the
$50 preferred trades at $37.00 on a zero premium and 8.44% current yield.
6
<PAGE>
Minimum Initial Investment - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.
Additionally, The Gabelli Global Convertible Securities Fund and other Gabelli
Funds are available through the no-transaction fee programs at many major
discount brokerage firms.
In Conclusion
We are research-driven stock pickers with a long term time horizon. Our
goal is to identify attractive convertible securities of companies selling at a
discount to their intrinsic value which have a catalyst to unlock that value. We
believe this philosophy provides us with a margin of safety that buffers us from
the vicissitudes of today's volatile marketplace.
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's Nasdaq symbol is GAGCX. Please call us during the
business day for further information.
Sincerely,
/s/ Hart Woodson
A. Hartswell Woodson, III
Portfolio Manager
July 15, 1999
- --------------------------------------------------------------------------------
Top Ten Holdings
June 30, 1999
Global Telesystems Group Inc. Cv. Pfd.
Canal Plus/Mediaset Sub. Deb. Cv.
Toyoda Gosei Co. Ltd. Sub. Deb. Cv.
Softbank Corp. Cv.
Houston Industries Inc./Time Warner Cv. Pfd.
CSC Holdings Inc. Cv. Pfd.
Yamanouchi Pharmaceutical Co. Ltd. Cv.
NTL Inc. Sub. Deb. Cv.
Winstar Communications Inc. Cv. Pfd.
Carriage Services Cv. Pfd.
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
7
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments -- June 30, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Principal Market
Amount Cost Value
------ ---- -----
<S> <C> <C> <C>
CORPORATE BONDS -- 60.1%
Automotive: Parts and Accessories -- 3.3%
20,000,000(b) Toyoda Gosei Co. Ltd.
Sub. Deb. Cv.
0.75%, 03/31/04 ....................... $ 170,283 $ 257,113
---------- ----------
Broadcasting -- 7.0%
1,000,000(c) Canal Plus / Mediaset
Sub. Deb. Cv.
3.50%, 04/01/02 ....................... 182,130 302,641
$ 90,000 Clear Channel Communications Inc.
2.63%, 04/01/03 ....................... 114,976 114,413
100,000 Scandinavian Broadcasting
System SA Sub. Deb. Cv.
7.00%, 12/01/04 ....................... 112,734 124,000
---------- ----------
409,840 541,054
---------- ----------
Building and Construction -- 1.4%
91,840 Bouygues SA Cv.
1.70%, 01/01/06 ....................... 109,357 110,875
---------- ----------
Business Services -- 1.7%
131,976 Vivendi Cv.
1.25%, 01/01/04 ....................... 149,764 134,313
---------- ----------
Cable -- 4.3%
100,000 Bell Atlantic Financial Cv.
4.25%, 09/15/05 ....................... 100,922 102,625
145,000 NTL Inc.,
7.00%, 12/15/08 (a) ................... 245,674 228,013
---------- ----------
346,596 330,638
---------- ----------
Communications Equipment -- 1.9%
100,000 Swiss Life / Mannesmann AG
Sub. Deb. Cv.
1.50%, 05/20/03 ....................... 115,554 145,250
---------- ----------
Computer Software and Services -- 3.2%
10,000,000(b) Softbank Corp. Cv.
0.50%, 03/29/02 ....................... 99,126 251,578
---------- ----------
Consumer Products -- 2.3%
150,000 Nestle Holdings Inc. Cv.
3.00%, 06/17/02 ....................... 165,522 177,375
---------- ----------
Electronics -- 3.3%
10,000,000(b) Mimasu Semiconductor
Industry Co.
0.80%, 05/31/06 ....................... 92,765 94,187
15,000,000(b) Toshiba Corp. Cv.
1.80%, 03/29/02 ....................... 159,008 165,446
---------- ----------
251,773 259,633
---------- ----------
Energy and Utilities -- 1.4%
110,000 PennzEnergy Co.,
4.95%, 08/15/08 ....................... 118,405 112,132
---------- ----------
Equipment and Supplies -- 2.9%
100,000 Antec Corp.
Sub. Deb. Cv.
4.50%, 05/15/03 (a) ................... 100,000 147,375
100,000 Elektrim SA,
2.00%, 05/30/04 ....................... 74,911 76,983
---------- ----------
174,911 224,358
---------- ----------
Financial Services -- 11.7%
15,000,000(b) Bank of Fukuoka Ltd.
1.10%, 09/28/07 ....................... 137,454 127,772
$ 150,000 Cregem Finance NV
Sub. Deb. Cv.
2.75%, 01/06/04 ....................... 164,510 162,750
495,000 Finaxa Sub. Deb. Cv.
3.00%, 01/01/07 ....................... 121,299 116,708
200,000,000(d) Mediobanca International
SpA Cv.
Zero Cpn., 12/18/01 ................... 129,717 106,255
20,000,000(b) Ricoh Leasing Co. Ltd.
0.40%, 09/30/02 ....................... 188,497 213,159
150,000 UBS Finance NV Cv.
2.75%, 06/16/02 ....................... 152,939 181,499
---------- ----------
894,416 908,143
---------- ----------
Health Care -- 4.5%
200,000 Roche Holdings Inc. Cv.
Zero Cpn., 04/20/10 (a) ............... 137,971 114,750
20,000,000(b) Yamanouchi Pharmaceutical
Co. Ltd. Cv.
1.50%, 12/31/02 ....................... 198,922 232,988
---------- ----------
336,893 347,738
---------- ----------
Publishing -- 2.2%
250,000 Medya Holding
Sub. Deb. Cv.
10.00%, 06/28/01 ...................... 249,771 168,750
---------- ----------
Retail -- 1.8%
50,000 Home Depot Inc.
Sub. Deb. Cv.
3.25%, 10/01/01 ....................... 58,755 139,875
---------- ----------
Telecommunications -- 4.6%
250,000 Rogers Communications Inc. Cv.
2.00%, 11/26/05 ....................... 192,209 192,813
100,000 Telefonica Europe BV
Sub. Deb. Cv.
2.00%, 07/15/02 ....................... 164,734 163,750
---------- ----------
356,943 356,563
---------- ----------
Transportation -- 2.6%
207,000 International Container
Terminal Services
Sub. Deb. Cv.
1.75%, 03/13/04 ....................... 197,514 204,413
---------- ----------
TOTAL CORPORATE BONDS ................... 4,205,423 4,669,801
---------- ----------
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<S> <C> <C> <C>
PREFERRED STOCKS - 31.4%
Business Services -- 2.1%
4,800 Cendant Corp.
7.50% Cv. Pfd. ........................ 230,078 165,300
---------- ----------
Cable -- 8.7%
2,200 CSC Holdings Inc.
8.50% Cv. Pfd., Ser. I ................ 60,710 237,600
2,000 Houston Industries Inc./Time
Warner Inc.
7.00% Cv. Pfd. ........................ 108,599 238,499
1,400 MediaOne Group Inc.
4.50% Cv. Pfd. ........................ 116,270 209,738
---------- ----------
285,579 685,837
---------- ----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
The Gabelli Global Convertible Securities Fund
Portfolio of Investments (Continued) -- June 30, 1999 (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Market
Shares Cost Value
------ ---- -----
<S> <C> <C> <C>
PREFERRED STOCKS (Continued)
Consumer Products -- 0.7%
1,000 McKesson Financial Trust Pfd. ........... $ 103,380 $ 51,563
---------- ----------
Consumer Services -- 2.9%
4,000 Carriage Services Inc.,
7.00% Cv. Pfd (a) ..................... 200,000 222,500
---------- ----------
Energy and Utilities -- 2.1%
EVI Inc.
300 5.00% Cv. Pfd. ........................ 9,413 11,588
4,000 5.00% Cv. Pfd. (a) .................... 200,000 154,500
---------- ----------
209,413 166,088
---------- ----------
Entertainment -- 1.0%
2,000 Village Roadshow Ltd.
6.50% Cv. Pfd. (a) .................... 85,000 74,000
---------- ----------
Food and Beverage -- 0.9%
1,400 Seagram Co.
7.50% Aces ............................ 70,683 69,913
---------- ----------
Paper and Forest Products -- 1.3%
2,000 Amcor Ltd.
7.25% Cv. Pfd. ........................ 94,000 97,875
---------- ----------
Publishing -- 1.7%
3,500 Reader's Digest Association Inc.
Cv. Pfd. .............................. 115,019 129,500
---------- ----------
Telecommunications -- 5.2%
6,000 Global Telesystems Group Inc.
7.25% Cv. Pfd. (a) .................... 299,999 401,999
---------- ----------
Wireless Communications -- 4.8%
1,000 Vodafone AirTouch plc
4.25% Cv. Pfd., Cl. C ................. 59,675 147,688
4,000 Winstar Communications Inc.
7.00% Cv. Pfd. ........................ 173,500 226,500
---------- ----------
233,175 374,188
---------- ----------
TOTAL PREFERRED STOCKS .................. 1,926,326 2,438,763
---------- ----------
COMMON STOCKS -- 7.2%
Computer Software and Services -- 0.9%
600 Oracle Corp. Japan ...................... 30,100 66,922
---------- ----------
Financial Services -- 5.6%
2,500 Banca Popolare di Brescia ............... 74,727 107,124
250 Shohkoh Fund & Co. Ltd. ................. 131,953 179,285
30,000 Sumitomo Trust &
Banking Co. Ltd. ...................... 156,843 144,254
---------- ----------
363,523 430,663
---------- ----------
Metals and Mining -- 0.2%
10,000 Durban Roodepoort Deep Ltd.+ ............ 63,454 17,235
---------- ----------
Wireless Communications -- 0.5%
13,000 Total Access Communications
plc+ .................................. 100,100 41,600
---------- ----------
TOTAL COMMON STOCKS ..................... 557,177 556,420
---------- ----------
WARRANTS -- 0.2%
Diversified Industrial -- 0.2%
100 Mori Seiki+ ............................. 60,000 14,400
---------- ----------
Entertainment -- 0.0%
50 Shochiku Co. Ltd.+ ...................... 53,125 1,875
---------- ----------
TOTAL WARRANTS .......................... 113,125 16,275
---------- ----------
OPTIONS -- 0.1%
Metals and Mining -- 0.1%
5,000 Durban Roodepoort Deep Ltd., ............ 10,084 1,906
Call, 12/31/99+
10,000 Durban Roodepoort Deep Ltd.,
Ser. B, Call, 06/30/02+ ............... 17,223 2,237
---------- ----------
TOTAL OPTIONS ........................... 27,307 4,143
---------- ----------
TOTAL
INVESTMENTS-- 99.0% ................... $6,829,358 7,685,402
==========
Other Assets and
Liabilities (Net)-- 1.0% .............. 79,310
----------
NET ASSETS -- 100.0%
(651,963 shares outstanding) .......... $7,764,712
=========
NET ASSET VALUE,
Offering and Redemption
Price Per Share ....................... $ 11.91
======
For Federal tax purpose:
Aggregate cost $6,829,358
==========
Gross unrealized appreciation $1,451,901
Gross unrealized depreciation (595,857)
----------
Net unrealized appreciation $ 856,044
==========
<CAPTION>
Principal Settlement Net Unrealized
Amount Date Appreciation
------ ---- ------------
FORWARD FOREIGN EXCHANGE CONTRACTS
312,305(e) Sold British Pounds
in exchange for
USD 492,420 ........................... 08/16/99 $7,580
</TABLE>
- ----------
(a) -- Security exempt from registration under Rule 144A of the Securities
Act of 1933, as amended. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At June 30, 1999, the market value of Rule
144A securities amounted to $1,343,137 or 17.3% of net assets.
(b) -- Principal amount denoted in Japanese Yen.
(c) -- Principal amount denoted in French Francs.
(d) -- Principal amount denoted in Italian Lira.
(e) -- Principal amount denoted in British Pounds.
+ -- Non-income producing security.
ACES -- Adjustable Convertible Exchange Security.
USD -- U.S. Dollars.
% of
Market Market
Global Diversification Value Value
- ---------------------- ------ ----------
North America 41.7% $3,201,507
Europe 29.9% 2,295,649
Japan 22.7% 1,748,980
Asia/Pacific Rim 5.4% 417,888
South Africa 0.3% 21,378
------ ----------
100.0% $7,685,402
====== ==========
See accompanying notes to financial statements.
9
<PAGE>
The Gabelli Global Convertible Securities Fund
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
================================================================================
Assets:
Investments, at value (Cost $6,829,358) .................. $ 7,685,402
Foreign currency, at value (Cost $617) ................... 618
Dividends, interest and reclaims receivable .............. 21,732
Receivable for investments sold .......................... 151,375
Net unrealized appreciation on forward
foreign exchange contracts ............................. 7,580
-----------
Total Assets ............................................. 7,866,707
-----------
Liabilities:
Payable for investment advisory fees ..................... 6,274
Payable for distribution fees ............................ 1,562
Payable to custodian ..................................... 59,397
Other accrued expenses ................................... 34,762
-----------
Total Liabilities ........................................ 101,995
-----------
Net Assets applicable to 651,963
shares outstanding ..................................... $ 7,764,712
===========
Net Assets consist of:
Capital stock, at par value .............................. $ 652
Additional paid-in capital ............................... 6,131,528
Accumulated net investment loss .......................... (20,298)
Accumulated net realized gain on investments
and foreign currency transactions ...................... 789,361
Net unrealized appreciation on investments
and foreign currency transactions ...................... 863,469
-----------
Total Net Assets ......................................... $ 7,764,712
===========
Net Asset Value, offering and redemption
price per share ($7,764,712 / 651,963
shares outstanding; 200,000,000
shares authorized of $0.001 par value) ................. $ 11.91
===========
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
================================================================================
Investment Income:
Dividends (net of foreign taxes of $62) ................ $ 45,594
Interest ............................................... 16,232
-----------
Total Investment Income ................................ 61,826
-----------
Expenses:
Investment advisory fees ............................... 36,834
Distribution fees ...................................... 9,208
Legal and audit fees ................................... 16,001
Shareholder services fees .............................. 15,835
Shareholder report expenses ............................ 10,630
Custodian fees ......................................... 5,358
Registration fees ...................................... 5,326
Organizational expenses ................................ 1,073
Directors' fees ........................................ 180
Miscellaneous expenses ................................. 1,291
-----------
Total Expenses ......................................... 101,736
-----------
Net Investment Loss .................................... (39,910)
-----------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments and
foreign currency transactions ........................ 797,176
Net change in unrealized appreciation
on investments and foreign currency
transactions ......................................... 445,713
-----------
Net realized and unrealized gain on
investments and foreign currency
transactions ......................................... 1,242,889
-----------
Net increase in net assets resulting
from operations ...................................... $ 1,202,979
===========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
---------------- ------------
<S> <C> <C>
Operations:
Net investment loss .............................................. $ (39,910) $ (80,913)
Net realized gain on investments and foreign currency transactions 797,176 74,754
Net change in unrealized appreciation on investments and
foreign currency transactions .................................. 445,713 744,636
----------- -----------
Net increase in net assets resulting from operations ............. 1,202,979 738,477
----------- -----------
Distributions to shareholders:
In excess of net investment income ............................... -- (5,156)
Net realized gain on investments ................................. -- (53,777)
----------- -----------
Total distributions to shareholders .............................. -- (58,933)
----------- -----------
Capital share transactions:
Net decrease in net assets from capital share transactions ....... (764,389) (2,728,084)
----------- -----------
Net increase / (decrease) in net assets .......................... 438,590 (2,048,540)
Net Assets:
Beginning of period .............................................. 7,326,122 9,374,662
----------- -----------
End of period .................................................... $ 7,764,712 $ 7,326,122
=========== ===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Unaudited)
================================================================================
1. Organization. The Gabelli Global Convertible Securities Fund (the "Fund"), a
series of Gabelli Global Series Funds, Inc. (the "Corporation"), was organized
on July 16, 1993 as a Maryland corporation. The Fund is a non-diversified,
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), and one of four separately managed
portfolios (collectively, the "Portfolios") of the Corporation. The Fund's
primary objective is to obtain a high rate of total return. The Fund commenced
investment operations on February 3, 1994.
2. Significant Accounting Policies. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day, except for open short positions, which are
valued at the last asked price). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by Gabelli Funds, LLC
(the successor to Gabelli Funds, Inc. as the investment adviser) (the
"Adviser"). Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Board of
Directors. Short term debt securities with remaining maturities of 60 days or
less are valued at amortized cost, unless the Directors determine such does not
reflect the securities' fair value, in which case these securities will be
valued at their fair value as determined by the Directors. Debt instruments
having a greater maturity are valued at the highest bid price obtained from a
dealer maintaining an active market in those securities. Options are valued at
the last sale price on the exchange on which they are listed. If no sales of
such options have taken place that day, they will be valued at the mean between
their closing bid and asked prices.
Repurchase Agreements. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Bank of
New York, with member banks of the Federal Reserve System or with other brokers
or dealers that meet credit guidelines established by the Directors. Under the
terms of a typical repurchase agreement, the Fund takes possession of an
underlying debt obligation subject to an obligation of the seller to repurchase,
and the Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. The Fund will always
receive and maintain securities as collateral whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Fund in each agreement. The Fund will make payment for such securities
only upon physical delivery or upon evidence of book entry transfer of the
collateral to the account of the custodian. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a
11
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
daily basis to maintain the adequacy of the collateral. If the seller defaults
and the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
Options. The Fund may purchase or write call or put options on securities or
indices. As a writer of put options, the Fund receives a premium at the outset
and then bears the risk of unfavorable changes in the price of the financial
instrument underlying the option. The Fund would incur a loss if the price of
the underlying financial instrument decreases between the date the option is
written and the date on which the option is terminated. The Fund would realize a
gain, to the extent of the premium, if the price of the financial instrument
increases between those dates.
As a purchaser of put options, the Fund pays a premium for the right to sell to
the seller of the put option the underlying security at a specified price. The
seller of the put has the obligation to purchase the underlying security upon
exercise at the exercise price. If the price of the underlying security
declines, the Fund would realize a gain upon sale or exercise. If the price of
the underlying security increases, the Fund would realize a loss upon sale or at
expiration date, but only to the extent of the premium paid. During the six
months ended June 30, 1999 the Fund did not write options.
Futures Contracts. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At June 30, 1999, there were no open futures contracts.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
Forward Foreign Exchange Contracts. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments and foreign
currency transactions. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
12
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
Foreign Currency Translation. The books and records of the Fund are maintained
in United States (U.S.) dollars. Foreign currencies, investments and other
assets and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. Net realized foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency transactions and the difference
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts actually received. The portion of foreign currency gains and
losses related to fluctuation in exchange rates between the initial trade date
and subsequent sale trade date is included in realized gain/(loss) on
investments.
Securities Transactions and Investment Income. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
Expenses. Certain administrative expenses are common to, and allocated among,
the Portfolios. Such allocations are made on the basis of each Portfolio's
average net assets or other criteria directly affecting the expenses as
determined by the Adviser.
Provision for Income Taxes. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties. If the value of more than 50%
of the Fund's total assets at the close of any taxable year consists of stocks
or securities of non-U.S. corporations, the Fund is permitted and may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders.
3. Investment Advisory Agreement. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment
13
<PAGE>
The Gabelli Global Convertible Securities Fund
Notes to Financial Statements (Continued) (Unaudited)
================================================================================
program for the Fund's portfolio, oversees the administration of all aspects of
the Fund's business and affairs and pays the compensation of all Officers and
Directors of the Fund who are its affiliates.
4. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 1999, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $9,208, or 0.25% of average daily
net assets, the annual limitation under the Plan. Such payments are accrued
daily and paid monthly.
5. Organizational Expenses. The organizational expenses of the Fund are being
amortized on a straight-line basis over a period of 60 months.
6. Portfolio Securities. Purchases and sales of securities for the six months
ended June 30, 1999, other than short term securities, aggregated $7,017,247 and
$7,591,985, respectively.
7. Transactions with Affiliates. During the six months ended June 30, 1999, the
Fund paid brokerage commissions of $70 to Gabelli & Company, Inc. and its
affiliates.
8. Line of Credit. The Fund has access to an unsecured line of credit from the
custodian for temporary borrowing purposes. Borrowings under this arrangement
bear interest at 0.75% above the Federal Funds rate on outstanding balances.
There were no borrowings outstanding at June 30, 1999.
The average daily amount of borrowings outstanding during the six months ended
June 30, 1999 was $27,250, with a related weighted average interest rate of
5.46%. The maximum amount borrowed at any time during the six months ended June
30, 1999 was $140,000.
9. Capital Stock Transactions. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
------------- -----------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................ 79,549 $ 875,243 81,274 $ 801,016
Shares issued upon reinvestment of dividends -- -- 5,590 55,681
Shares redeemed ............................ (151,606) (1,639,632) (361,093) (3,584,781)
----------- ----------- ----------- -----------
Net decrease ............................. (71,956) $ (764,389) (274,229) $(2,728,084)
=========== =========== =========== ===========
</TABLE>
10. New Share Classes. On March 9, 1999, the Board of Directors of the Fund
approved (subject to shareholder approval of Amendments to the Fund's Articles
of Incorporation to permit the Fund to offer additional classes of shares) a
Rule 18f-3 Multi-Class Plan relating to the creation of three additional classes
of shares of the Fund - Class A Shares, Class B Shares and Class C Shares (the
"New Share Classes"). The existing class of shares was redesignated as Class AAA
Shares. In addition, the Board has also approved an Amended and Restated
Distribution Agreement, Rule 12b-1 plans for each of the New Share Classes and
an Amended and Restated Plan of Distribution for the existing class of shares
(Class AAA Shares) to be effective upon the commencement of the offering of the
New Share Classes. Effective July 22, 1999, shareholder approval permitting the
Fund to offer additional classes of shares was attained.
14
<PAGE>
The Gabelli Global Convertible Securities Fund
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 -----------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994+
---------- ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period ........ $10.12 $9.39 $10.18 $10.79 $9.93 $10.00
---------- ------ ------ ------- ------- -------
Net investment income / (loss) .............. (0.06) (0.12) 0.11 0.43 0.39 0.16
Net realized and unrealized gain / (loss)
on investments ............................ 1.85 0.93 0.17 0.16 0.86 (0.07)
---------- ------ ------ ------- ------- -------
Total from investment operations ............ 1.79 0.81 0.28 0.59 1.25 0.09
---------- ------ ------ ------- ------- -------
Distributions to shareholders:
Net investment income ....................... -- -- (0.14) (0.43) (0.39) (0.16)
In excess of net investment income .......... -- (0.01) -- -- -- --
Net realized gain on investments ............ -- -- (0.90) (0.77) -- --
In excess of net realized gain
on investments ............................ -- (0.07) (0.03) -- -- --
---------- ------ ------ ------- ------- -------
Total distributions ......................... -- (0.08) (1.07) (1.20) (0.39) (0.16)
---------- ------ ------ ------- ------- -------
Net asset value, end of period .............. $11.91 $10.12 $9.39 $10.18 $10.79 $9.93
========== ====== ====== ======= ======= =======
Total return++ .............................. 17.7% 8.6% 2.8% 5.5% 12.6% 0.9%
========== ====== ====== ======= ======= =======
Ratios to average net assets and supplemental data:
Net assets, end of period (in 000's) ........ $7,765 $7,326 $9,375 $13,527 $15,742 $15,574
Ratio of net investment income / (loss)
to average net assets ..................... (1.08)%(a) (1.00)% 1.17% 2.00% 2.90% 2.80%(a)
Ratio of operating expenses
to average net assets (b) ................. 2.76%(a) 2.63% 2.48% 2.35% 2.41% 2.49%(a)
Portfolio turnover rate ..................... 93% 89% 100% 126% 152% 329%
</TABLE>
- ----------
+ From commencement of operations on February 3, 1994.
++ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the
period including reinvestment of dividends. Total return for the period of
less than one year is not annualized.
(a) Annualized.
(b) The Fund incurred interest expense during the year ended December 31,
1997. If interest expense had not been incurred, the ratio of operating
expenses to average net assets would have been 2.46%. In addition, the
ratio for the year ended December 31, 1997 does not include a reduction of
expenses for custodian fee credits. Including such credits, the ratio
would have been 2.47%.
See accompanying notes to financial statements.
15
8
<PAGE>
Gabelli Global Series Funds, Inc.
The Gabelli Global Convertible Securities Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Asset Management Inc.
Werner J. Roeder, MD
Felix J. Christiana Medical Director
Former Senior Vice President Lawrence Hospital
Dollar Dry Dock Savings Bank
Anthonie C. van Ekris
Anthony J. Colavita Medical Director
Attorney-at-Law BALMAC International, Inc.
Anthony J. Colavita, P.C.
John D. Gabelli
Senior Vice President
Gabelli & Company, Inc.
Officers and Portfolio Managers
Mario J. Gabelli, CFA A. Hartswell Woodson, III
President and Chief Vice President and
Investment Officer Portfolio Manager
Bruce N. Alpert James E. McKee
Vice President and Secretary
Treasurer
Distributor
Gabelli & Company, Inc.
Custodian, Transfer Agent and Dividend Agent
State Street Bank and Trust Company
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Gabelli Global Convertible Securities Fund. It is not authorized for
distribution to prospective investors unless preceded or accompa nied by an
effective prospectus.
- --------------------------------------------------------------------------------
